Sunday, December 30, 2012

For the second annual Idiots' Delight segment, rather than divvying up several small awards in order of significance, I opted instead to go for a broader, more central theme that I feel does a far better job at underscoring what 2012 all boiled down to.

The problem as I see it is that simply highlighting certain actors in what amounts to a Greek tragedy of sorts, never gets to the heart of the matter. Like that famous police drama Dragnet, only the names change, though it this case NOT to protect to innocent.

So let's get to it and rip this mother of a scab completely off.

The Tea Party: There have been many political movements in the illustrious history of the United States; none have been as malignant and damaging to the nation as the Tea Party movement that spread like wildfire throughout the Republican Party in the summer of 2009. What started out initially as a grass-roots movement quickly became co-opted by powerful special interests that saw an opportunity to channel the volatility of that movement into a vehicle to reestablished the political dominance and influence it lost in the '08 elections.

The result was a monumental wave in the 2010 midterms that swept Republicans back into the majority in the House and delivered several key governorships. But even back then the rhetoric and intransigence of this movement proved costly. The Senate, though there for the taking, remained in Democratic control. Many pundits blamed the Tea Party for backing candidates like Sharron Angle in Nevada and Christine O'Donnell in Delaware, who, quite frankly, had no business being on the national stage.

All throughout 2011 that co-opted movement behaved like a bunch of Sweathogs in an episode of Welcome Back Kotter. Last year's debt ceiling debacle resulted in the down grading of America's credit rating. It was, by all accounts, one of the most humiliating chapters in American history. So thorough was the Tea Party's grip on the reigns of power, that the GOP looked more like a group of hostages than a major political party.

But as embarrassing as 2011 was, 2012 took the cake. With a weak recovery and a vulnerable sitting president, victory seemed in sight. But the Tea Party-dominated GOP could not have been more inept. Pandering to a base that was pitifully out of touch with the majority of Americans, Mitt Romney, the Republican nominee for president, locked himself into a Pandora's box during his primary run and the majority of the general election. The low point of his campaign was the now infamous 47 percent video in which Romney ostensibly wrote off almost half the electorate, thus sealing his fate. Not even a credible debate performance in Denver against an obviously listless Barack Obama could change his fortunes.

But it wasn't just Romney. The rot had spread throughout the entire Party. Pick an issue and the GOP was on the wrong side of it. Taxes, immigration reform, gay and reproductive rights, global warming, foreign policy, you name it. Republicans were viewed as extremist in virtually every one of their stances. Like the 2010 midterms, weak candidates like Richard Mourdock in Indiana, George Allen in Virginia and Todd Akin in Missouri were thoroughly rejected by their respective state's voters and proved costly to Republican plans for, once more, retaking the Senate. Indeed, Democrats gained two seats.

The Not Ready for Prime Time theme wasn't limited just to the Senate. The GOP lost eight seats in the House, including Allen West in Florida who brought a whole new definition to the term unhinged. Were it not for gerrymandering of congressional districts in Republican-controlled states, it is quite conceivable that the Democrats could've rested control away from the GOP.

And now, after a resounding defeat in the November elections, they remain defiant as ever. With just over a day left till the fiscal cliff, House Republicans are blocking a Senate bill to extend middle-class tax cuts in order to protect tax cuts for the top 2 percent of income earners. Speaker John Boehner is in a no-win situation. If he allows an up and down vote in the House, which would be the right thing to do, the bill will most likely pass - albeit with a majority of the votes coming from Democrats. If he holds firm and prevents the bill from making it to the floor, which is what his base wants him to do, then all the tax cuts expire on January 1. Either way, he's screwed. The irony here is that the GOP is thumbing its nose at a deal which would give them $1 trillion in spending cuts over the next ten years AND entitlement reform to defend an ideology that an overwhelming majority of voters don't support.

As if this fiasco wasn't bad enough, Republicans are threatening a repeat of 2011's debt-ceiling circus in February. Regardless of what happens with the Bush tax cuts, they are ready, willing and able to allow a default and bring the entire economy to its knees if their demands aren't met. You couldn't make this shit up if you wanted to. Spoiled brats behave better than these delinquents.

The antics of the Tea Party have done more than just reduce a major political party to a laughing stock, they have severely damaged the overall political balance that a healthy democracy desperately needs to thrive. The United States, for most of its history, has been a two-party country. As things stand now, one party appears content to take its ball and go home.

Whether the Republican Party can extricate itself from this stranglehold the Tea Party has over it remains to be seen. If it can't, we may be in for one helluva long and gut-wrenching run. Not since our founding has a movement so threatened the very essence of the Republic itself.

Saturday, December 29, 2012

There's an old saying in the business world: Nothing kills a bad product better than good advertising. According to a piece in The Huffington Post, Florida's attempts at disenfranchising voters resulted in roughly 49,000 people choosing to stay home rather than wait in incredibly long lines at polling places. And yet, Barack Obama still captured the state along with its 29 electoral votes on election night.

Florida wasn't the only state to go out of its way to discourage certain voters from staying away from the polls. Voter ID laws in Ohio, Pennsylvania and Virginia were designed to prevent the President from winning reelection. The Pennsylvania law was ostensibly stayed, while the Ohio law was basically neutered. In the end, not one effort by Republican governors to deny key blocks from voting proved successful. The reason was really quite simple.

The GOP was so over the top in its campaign to suppress voter turnout that the very groups they were looking to undermine were more determined than ever to vote. Turnout among African American and Hispanic voters approached '08 levels.

In an ironic twist of fate, what the Republican Party had intended for political gain, badly boomeranged on it. The result was a trouncing on election night to the astonishment of a great many conservatives, most of whom had badly overestimated the chickens they had in the coop.

And now, fresh off a self-inflicted wound, the GOP must come to terms with a staggering reality: the groups of voters they had gone out of their way to alienate aren't likely to forget how badly they were treated. Indeed, they'll be certain to remember the slight.

Which brings me to another favorite saying of mine: ignore your customers and they'll go away.

Sunday, December 23, 2012

You wouldn't think it possible that anyone or anything could top the atrocity that occurred in Newtown, Connecticut the other week; wouldn't think it possible that anyone or anything could inflict as much pain and suffering as that crazed gunman who snuffed out the lives of 26 innocent people, 20 of whom were children.

Well, you'd be wrong, because this month's winner of the Idiot's Delight award nailed it perfectly. As you will see, this boob is truly one for the ages.

Without further ado:

Wayne LaPierre, executive vice president of the National Rifle Association: With all the callousness of a person rubbing salt on an open wound, this moron, exactly one week after the heinous act at Sandy Hook Elementary School, insulted not only the intelligence of a nation, but the dignity of each and every family devastated by the loss of their loved ones.

At a press conference, LaPierre had the nerve to say that more guns, not less, was the answer. He called for armed police officers in every school in America, ridiculing the very idea of gun-free schools. "The only thing that stops a bad guy with a gun is a good guy with a gun." Apparently, LaPierre forgot that Columbine had an armed security guard and Virginia Tech had its own police department.

Back in the early 1970s, the seminal sitcom All in the Family, dealt with the issue of gun control in a now famous and, eerily, all-too-familiar scene in which Archie Bunker, responding to an on-air editorial he didn't like, came up with what he thought was the perfect solution for skyjacking: "All you have to do is arm all your passengers...The airlines wouldn't have to search the passengers anymore. They just pass out the pistols at the beginning of the trip and pick 'em up at the end. Case closed."

One could excuse Archie Bunker for being so stupid and ignorant - this was after all a social satire sitcom - but even an executive of one of the most powerful lobbyist groups in the country should have enough intelligence to know that the problem is that there are entirely too many people who have legal access to weaponry that has no place in civilian society.

The idea that the Second Amendment is an absolute right is absurd. Even the First Amendment isn't absolute. One is not allowed to shout "fire" in a crowded movie theater, or defame someone's reputation and then hide behind a supposed freedom of speech. A church may not engage in any behavior which is harmful or deadly (e.g. Jim Jones) to its congregants under the auspices of freedom of religious express. And no newspaper may print material which is deemed as a threat to national security because of freedom of the press.

If there are limits as to what constitutes freedom for our most cherished of rights, isn't it reasonable to expect that the same should apply to gun ownership? I seriously doubt that the Founders intended the Second Amendment to be taken carte blanche. There is simply no need for anyone to possess a weapon which has a capacity to fire 100 rounds of ammunition a minute. A simple handgun with a capacity to discharge 10 rounds or less is more than sufficient to protect oneself.

And while I don't expect the Wayne LaPierres of the world to understand that reasonable argument, I do expect them to have a little more couth and class, especially given the magnitude of the tragedy. His speech was inexcusable. Period!

Calls for gun control - long overdue - have flooded the op-ed pages of
numerous newspapers. The President has dispatched Joe Biden to come up
with legislation that can begin to effectively quell the outbreak of
these mass murders. Public polls overwhelmingly show support for a ban
on assault rifles and semi-automatic guns. Now is not the time to throw more fuel on an already out-of-control fire.

How much more innocent blood must be spilled before the nation finally puts the NRA and its henchmen in their place?

Friday, December 21, 2012

John Boehner's attempt to box President Obama into a corner has not only failed, it has had the unintended consequences of reducing the Speaker to a dead man walking. So much for stealing thunder.

Last night, Boehner called for a vote on his ill-fated Plan B, which, had it passed, would've extended the Bush tax cut rates for everyone under $1 million, thus putting congressional Democrats and Obama on the hot seat.

But pressure from the far Right all but killed the vote before it even had a chance to come to the floor. Boehner now knows that, if he expects to avoid going over the fiscal cliff, he has no choice but to accept a bill that Democrats will support.

Obama now has the leverage back that Boehner's stunt had threatened to snatch away. He should use it. He has been more than magnanimous in putting entitlements on the table and agreeing to extend the Bush tax rates up to $400 thousand instead of $250,000. In every way imaginable he has been the adult in the classroom, while his counterpart has been unable or unwilling to lead his caucus towards a workable solution.

The time for future concessions is over. The President must make it clear to the Speaker that the deal that is currently on the table is as good as it will get. After January 1st, the offer will be significantly worse. Whether John Boehner survives as Speaker of the House remains to be seen. After yesterday's epic failure, I give his chances at no better than 50/50.

But this much is certain: In ten days an awful lot of bad things will happen all at once. That scenario must be avoided at all costs.

Wednesday, December 19, 2012

Don't look now but John Boehner may just have boxed Barack Obama into a corner from which the President may have a difficult time getting out of.

In what can only be described as the counter punch of all time, Boehner put an "offer" on the table which puts Democrats into a very nasty predicament. He has proposed extending all the Bush tax cut rates for everyone under $1 million. Everyone above that line would see their taxes go back to the Clinton-era rates.

Forget for a moment that the "offer" is a joke; forget for a moment that it fails to tackle the sequestration cuts that are scheduled to kick in starting in January and that the debt-ceiling, which Boehner offered to take off the table, is now back on and just around the corner, politically speaking this move is nothing short of ingenious.

Think about it. Let's assume that he can get 218 Republicans to sign on to it - a tall order given that it still allows for rate hikes and the loonies on the A.M. radio dial are already up in arms - he will be able to pass a bill to extend the Bush tax cuts for 99% of the population. Assume also that the bill is dead on arrival in the Senate, as Harry Reid has promised, Boehner can now say that he got a bill passed that protected the overwhelming majority of people from higher taxes and it was the Democrats who blocked it.

Talk about a turn of events.

Obama can say, and rightly so, that he has the overwhelming majority of Americans behind him. He can also threaten Boehner that, if they go over the fiscal cliff, the best deal he can get will be significantly worse than the one he has now, which includes an extension of all rates below $400 thousand, entitlement reform and spending cuts equal to the sequestration requirements.

Of course the problem for the President is that Boehner knows all that and is still willing to call Obama's bluff. The take it or leave it "offer" from the Speaker is designed with only one objective in mind: to steal away the leverage Democrats currently hold in these negotiations.

If we do in deed go over the cliff, each week that goes by, voters will grow inpatient, not only with the gridlock in Washington, but their shrinking paychecks. The markets will have a field day as well as we approach yet another debt ceiling crisis. They are already beginning to freak out at the prospect of John Boehner's Plan B. As I mentioned in an earlier piece, Obama is the commander in chief. He has a far greater responsibility to prevent this circus from running amok than the lunatics who keep threatening to burn down the asylum.

A financial crisis and a double-dip recession occurring in the first few months of his second term would rule out any hope he has of carving out a legacy for himself.

The President must, at all costs, avoid that scenario. He must somehow work out a deal with his counterpart and do it before December 31st. Whether that means going slightly higher on the rates - say up to $500 thousand - and maybe raise the eligibility age on Medicare to 67, whatever. Just get it done. Yes, as usual, progressives won't like it. But swallowing a little bit of caster oil now is a whole lot better than what lies ahead for the nation if Boehner's stunt is successful.

Saturday, December 15, 2012

It's time to stop mincing words. Time to stop worrying about the politics of this.

Yes, we have an awful lot of mentally ill people out there who need help and who
probably shouldn't be walking among us, and yes, as a Facebook friend of mine adroitly pointed
out yesterday, guns don't kill people, dicks with guns kill people, and, yes, if we didn't have
guns, maybe some of these killings would've been carried out with knives or sticks or bricks
or maybe even evil eyes, for all we know.

But the common denominator in all
these mass murders is guns. Period! The simple and undeniable truth is that guns
in this country are just too damn easy to get a hold of. They are falling into
the wrong hands and innocent people are being killed. Yesterday, twenty children were
senselessly murdered by a madman. Does anybody really think he could've pulled
this off with just a knife? REALLY?

This has now become an epidemic of
epic proportion. How many more must needlessly die to defend a strict
interpretation of an amendment that, if you read it closely and honestly, seems
to be referring to a "well regulated militia" not an absolute right?

It
is time for our elected officials to collectively grow a pair and stand up to
the NRA. Republicans, as well as Democrats, have way too much blood on their hands. Gun-control regulation is long overdo. When it is easier to buy a
hand gun than to get a prescription for a controlled substance, something is
wrong. Here's another sad fact, 40% of the handguns that are LEGALLY sold in the
U.S. occur WITHOUT a background check. That's appalling!

Will gun-control
regulation solve all our problems? Of course not. But it will help and it may
prevent the next massacre.

Tuesday, December 11, 2012

I always knew I had a customer right where I wanted them the moment they started talking price. All I had to do was find the right number and the deal was done. Going into the fiscal cliff negotiations, Barack Obama knows what John Boehner wants – what he needs – to get the upper-tier Bush tax cuts to go away. Boehner wants entitlement reform and spending cuts.

Regarding the latter, the sequestration is taking care of that. If Congress and the President don’t come up with a deal, the cuts go through anyway, all $1 trillion of them. But the former is a bit stickier, primarily since the Left doesn’t want any change to Medicare that would affect the eligibility age – currently at 65.

So if Boehner wants the age raised to 67, and he has said as much, than Obama should do what every successful salesman does the moment the customer tips his hand: he should negotiate the best deal off of that demand. In return for raising the age to 67, Obama should get the following in return:

Enough spending cuts to equal the automatic sequestration, but no more. Forget that 3 for 1 bullshit that Republicans demanded last year. And those cuts should be phased in gradually over the next ten years to avoid a double-dip recession. Oh and by the way, the Pentagon takes half the hit. The idea that the United States needs to spend more money on defense than the next ten countries combined is absurd.

Factoring in the savings from the ending of the wars in Iraq and Afghanistan, that collectively adds up to about $200 billion a year in reduced spending, or $2 trillion over the next ten years.

No debt-ceiling fiasco. Boehner gets his caucus to sign off on raising it without last year’s nonsense. Also, he agrees that 2014 won’t be a repeat of 2011's circus; no holding a gun to the President's head during an election year.

Upper-tier Bush cuts sunset completely. Boehner allows the Senate bill to be voted on in the House. Republicans can shout all they want, but it will pass with more than enough votes if it goes to the floor. If 39.6 percent is too steep, then settle for a number around 37 or 38 percent. But, one way or another, rates are going up. Period!

Social Security is off the table. The same is true for any talk of vouchers for Medicare and block grants for Medicaid. While both may have structural problems, they can be fixed without destroying them.

Why should Obama "cave" on Medicare? After all, doesn't he have a mandate based on the election? Well, yes and no.

While Obama does have a mandate, it's clear the electorate wants solutions out of Washington. Obama has an opportunity to bring about a rather significant one and he should do whatever he can to make it happen. Yes, he has leverage, and he should use it, but he should also look ahead to the next four years. If he plans on accomplishing anything of substance, he must put this matter to bed before the end of the year.

Think about it. Last year Obama was willing to put entitlements on the table to get roughly $800 billion in supposed revenue, which consisted of the elimination of certain deductions and loopholes. If Boehner hadn't wet his pants when Obama "moved the goal posts" on him, the Speaker would've gotten one helluva deal. Now Obama is going to get more revenue and most of it from increasing rates. Elections do have consequences.

But Obama needs to be cautious here. As I mentioned in my last piece, some Republicans have already gone on record as saying they would relent on the tax rates. The plan is to get even over the debt ceiling and budget battle, the real fiscal cliff, as I see it. Let's assume that the deadline passes and all the tax cuts expire. Some progressives believe that would only strengthen Obama's hand. I respectfully disagree.

While it is certainly true that most Americans would blame the GOP for a failure to compromise, the longer we go past January 1st without a deal, the more public opinion will start to turn against the President. If this drags on into February and we default on the debt ceiling, this becomes the cluster fuck of all time. Like it or not, Obama is the commander in chief. He will get the blame if the nation's credit gets downgraded again, fair or not.

Every president wants to leave a legacy behind them. Bill Clinton's was balancing the budget for the first time since 1957, quite an accomplishment. Obama has a chance to one up that considerably, but not if he presides over a fiscal meltdown.

Saturday, December 8, 2012

Back in January of 2010, I wrote a piece on Obama's first year in office in which I recalled a famous scene from the movie Patton and how that scene crystallized the state both the Administration and Congressional Democrats were in.

It was December 1944 and General George S. Patton was sitting in a room full of
generals. The Germans had just launched The Ardennes Offensive, better known
as The Battle of the Bulge, and General Eisenhower wanted to know who among them
could relieve the beleaguered forces at Bastogne. Patton spied the room
for a brief moment and then blurted out, “I can attack with three divisions in
48 hours.”

The other generals were astounded at Patton’s bravado and
openly questioned how he could make such a commitment of his soldiers who were
already involved in a substantial campaign and would have to travel over 100
miles in the middle of a fierce snow storm. His reply was equally astounding,
“They’ll do it because they’re good soldiers and because they realize as I do
that we can still lose this war.”

In one sentence Patton had nailed it on
the head. Of his many memorable quotes, none were so on point and foreboding as
that one, for Patton was not one to count his chickens before they hatched.
Despite the apparent superiority of the Allied forces and the shrinking morale
of the German army, the war was not over. The enemy had not yet been defeated. A
misstep here, a misstep there could spell disaster. We all know what happened:
Patton’s divisions arrived in time to rescue Bastogne and within months, the
Germans had surrendered. The war in Europe was over. The moral of that story was
simple: never assume anything. The fight is never over so long as your adversary
is still alive. To quote the great Yogi Berra, “It ain’t over till it’s
over.”

Pity President Obama never met George Patton. Pity the Democratic Party never
met George Patton. Since their meteoric ascension last November, which gave them
virtually unfettered power, both Obama and the Democratic House and Senate have
behaved like a football team entering the third quarter with a three touchdown
lead playing prevent defense. Anyone who has ever seen a football game knows
full well that teams that employ such a defense usually prevent themselves from
winning. They are constantly on their heals while their opponents continue to
march up and down the field. The rationale given for this defense is based on
the assumption that three touchdown leads are rarely overcome. And certainly of
course, the way the political landscape looked last year, that assumption seemed
as secure as gold. The Republican Party was in retreat and disarray, politically
isolated and socially in the hands of individuals who neither had the
intellectual capacity to understand the position they were in or the vision to
plot a course out of the wilderness. Pundits began to openly wonder if a
comparison to the Whig Party was not appropriate. But, as any competent
sportscaster will tell you, that’s why they play four quarters.

As we near the end of Barack Obama's first term in office, I feel another famous Yogi Berra saying coming on. It's Déjà vu all over again.

Obviously a few things have changed since January, 2010. The Republicans took the House in that year's midterm elections, but failed to retake the White House and the Senate and actually lost a few seats in the House in 2012. Including this one, they have now lost the popular vote in five of the last six presidential elections. Clearly something is rotten in Denmark, or wherever the hell it is that their message is crafted.

But, even with victory in plain sight, I can't quite shake that sickening feeling that the other party in town - the not so grand one - hasn't learned its lessons from history and is about to once more find out that the enemy is alive and well and regrouping behind the scenes. As Jerry Girard would say if he were alive, the Democrats are about to snatch defeat from the jaws of victory.

I've been thinking a lot about the upper-tier Bush tax cuts and the leverage Obama and the Democrats have over the House Republicans on this issue. In the Senate, the GOP has taken a far more pragmatic tact. They've even passed a bill extending the middle class tax cuts. All the House has to do is put the bill to a vote and the conventional wisdom is that it will get enough Republican votes to pass.

So why hasn't that happened yet? Certainly John Boehner knows he has no choice. There is no way in hell he is going to go down as the man who allowed taxes to go up for 98 percent of the country. So why delay the inevitable?

Because every second Boehner delays allows him to gather the leverage he will need to use next year when the real fiscal cliff arrives. The debt ceiling fiasco of 2011 is still fresh in the minds of most Americans and, sadly, the world. It was by far the most embarrassing chapter in our nation's history. A group of domestic terrorists disguised as congressmen held the nation's economy hostage until their demands were met. The result was a credit downgrade and a badly tarnished reputation.

Well, if you thought Round One was a circus, you ain't seen nothing yet. Round Two is only a couple of months away. Just wait until Boehner and House Republicans have their way with Obama and the Democrats next year. The price for relenting on the top-tier Bush tax cuts will be steep indeed. You can count on it.

They will demand huge cuts in spending, as well as entitlements - yes, even Social Security - that will ostensibly render them crippled. They will do all of this because they feel they can. Because, even on the heels of a devastating electoral loss, they are as defiant as ever. Irrational people cannot be reasoned with. All they have is their rage and their objectives.

I have been looking closely for signs that the Republican Party is on the verge of some metamorphosis, in which the seeds of a kinder, gentler, more centrist party might emerge. With a few rare exceptions, the bulk of the GOP remains as fervent as ever in its stances. Far from an act of contrition, Republicans seem poised to double down on the same strategy that led to their demise in the first place. And while that is good news, long term, for Democratic prospects, in the short term, it promises to be one helluva ugly and nasty ride.

Throughout most of Obama's first term, the strategy for Republicans was twofold: Put up as many roadblocks to the President's attempts to fix the economy and then, when the recovery turned out to be not as robust as it should've been, blame him for it. That convoluted logic blew up in their faces last November as millions of voters reelected Obama, but, more importantly, rejected the GOP's narrative.

Rather than admit defeat, the GOP is setting its sights on 2014. If they can crash the economy next year by forcing another default fiasco, they can possibly retake the Senate and build on their majority in the House. That would ostensibly make Obama's last two years moot.

And that's why the President cannot let this go into 2013. While allowing the upper-tier Bush tax cuts to sunset is certainly a priority, by no means should it be the only one. As I wrote last month, Obama must get the grand bargain with Boehner he should've gotten back in 2011. If all he gets this year is the tax cuts, he will have won the battle and quite possibly lost the war.

There is no gentle way to put this. A debt default and massive cuts to entitlements must be prevented at all costs. The harm to the nation would be irrevocable. While it may be tempting to force Boehner into a corner just to get higher tax rates on millionaires and billionaires, it may not be worth the collateral damage that will ensue down the road.

If Obama can get significant revenues from a mixture of tax increases - say 37 percent instead of 39.6 percent - the closing of loopholes and the elimination of certain deductions, while offering Boehner enough cuts in domestic spending (spread out over a ten-year period so as not to derail the recovery), along with some badly-needed reforms to Medicare and Medicaid, he should take it. Such an agreement should include a raising of the debt ceiling sufficiently to get through 2013.

Both men could emerge from such a bargain as winners to their constituents. Obama could claim he got Republicans to give somewhat on taxes; Boehner could claim he got the cuts they needed to justify a deal. Bottom line, revenue would be increased, spending decreased and entitlements would be strengthened. If that deal were to happen, the markets would respond favorably and our credit rating, which took a bruising a year ago, might well be restored to its former self.

Of course that scenario is looking less and less likely. Both sides have dug in their heels and appear unwilling to blink first. And while it is refreshing to see this President show some spine after almost four years of playing Mr. Congeniality, I can't help but feel he is being set up, yet again, by the opposition. The Germans are, once more, mounting a winter offensive.

Call it an over-developed sense of morbidity. I've seen this movie way too many times before and the ending is usually not a happy one.

It's become painfully obvious to me that while House Republicans and President Obama continue to duke it out over the top tier Bush tax cuts, most of the country still doesn't understand how all this will impact them.

If we take the President at his word that no household with an income under $250,000 will see their taxes go up, does that mean that every one above that number will automatically see an increase? The answer is no.

And that's because there's a difference between income and taxable income. Taxable income is basically gross income minus any deductions or exemptions such as charitable donations and mortgage interest. Since taxable income is what the IRS uses to determine what taxes we actually owe, under Obama's plan, in order for a household to see a tax increase, it would more than likely have to earn over $300,000.

And even those households which do go over that line aren't likely to see that big a difference in their taxes. Why? Because our tax system is based on marginal tax rates. Those households with a yearly taxable income of more than $250,000 will only have to pay the higher rate on that portion of income over the $250 thousand threshold.

Here's how it works. Currently there are six tax rates that start at 10 percent and top off at 35 percent. Obama wants that top rate to revert back to where it was during the Clinton Administration: 39.6 percent. Assuming that happens, households with a taxable income of, say, $275,000 would pay 33 percent on the first $250,000 and 39.6 percent on the remaining $25,000.

In other words, it isn't all or nothing. The fact is that the overwhelming majority of American households would see either no increase at all in their taxes or, at worst, a modest bump in them.

And regarding small businesses, it's important to note that the vast majority of them would, in all likelihood, not be impacted at all by the top rate going back up to 39.6 percent. The reason for this is that they are all required to file a 1120S (S-Corp) along with their personal return. The 1120S includes gross receipts along with any and all costs associated with the business, including payroll, insurance, payments to suppliers, rent, etc. In other words, the actual income of a small business is what it gets to keep after it pays its expenses, not what it earns. A company that grosses $1 million in sales, but has $800,000 in costs, would report $200,000 of "ordinary business income" on line 21 of its 1120S. As they say in basketball, no harm no foul.

So you see, when all is said and done, it's pretty hard to understand why the GOP is still stubbornly resisting a tax rate hike that will have little to no impact on the middle class and affect a tiny percentage of small businesses. Clearly they know they are fighting a lost cause. The President has the upper hand here. If he plays it well, he will prevail in the end.

Saturday, December 1, 2012

So far this has been a monthly segment, but this next guest writer might well have written the year's best Tip of the Hat piece. Seldom have I read anything that so thoroughly rips the veneer off a well-accepted and established narrative. It is a take down of the highest order. So scathing a critique is it, that its author is now considered a pariah by many conservatives and virtually the entire far Right. Which of course instantly makes him one of my favorite people.

I've heard of cathartic moments when the light of day suddenly bursts through the darkness, but this one stands head and shoulders above the rest. And while I take issue with some points in the piece - they should be self evident as you read along - the bulk of it is sheer brilliance.

Yes, it's long. That just means you'll have more to enjoy.

Revenge of the Reality-Based Community

I know that it’s unattractive and bad form to say “I told you so” when one’s
advice was ignored yet ultimately proved correct. But in the wake of the
Republican election debacle, it’s essential that conservatives undertake a
clear-eyed assessment of who on their side was right and who was wrong. Those
who were wrong should be purged and ignored; those who were right, especially
those who inflicted maximum discomfort on movement conservatives in being right,
ought to get credit for it and become regular reading for them once again.

I’m not going to beat around the bush and pretend I don’t have a vested
interest here. Frankly, I think I’m at ground zero in the saga of Republicans
closing their eyes to any facts or evidence that conflict with their dogma.
Rather than listen to me, they threw me under a bus. To this day, I don’t think
they understand that my motives were to help them avoid the permanent decline
that now seems inevitable.

For more than 30 years, I was very comfortable within the conservative wing
of the Republican Party. I still recall supporting Richard Nixon and Barry
Goldwater as a schoolchild. As a student, I was a member of Young Republicans
and Young Americans for Freedom at the height of the Vietnam War, when
conservatives on college campuses mostly kept their heads down.

In graduate school, I wrote a master’s thesis on how Franklin Roosevelt
covered up his responsibility for the Pearl Harbor attack—long a right-wing
obsession. My first real job out of graduate school was working for Ron Paul the
first time he was elected to Congress in a special election in 1976. (He lost
that same year and came back two years later.) In those days, he was the only
Tea Party-type Republican in Congress.

After Paul’s defeat, I went to work for Congressman Jack Kemp and helped
draft the famous Kemp-Roth tax bill, which Ronald Reagan signed into law in
1981. I made important contributions to the development of supply-side economics
and detailed my research in a 1981 book, Reaganomics: Supply-Side Economics
in Action.

After Reagan’s victory, I chose to stay on Capitol Hill, where I was staff
director for the Joint Economic Committee and thought I would have more impact.
I left to work for Jude Wanniski’s consulting company in 1984, but missed
Washington and came back the following year. Jude was, of course, the founding
father of supply-side economics, the man who discovered the economists Robert
Mundell and Arthur Laffer and made them famous.

I went to work for the Heritage Foundation, but left in 1987 to join the
White House staff. I was recruited by Gary Bauer, who was Reagan’s principal
domestic policy adviser. Gary remains well known among religious conservatives.
Late in the administration I moved over to the Treasury Department, where I
remained throughout the George H.W. Bush administration.

Afterwards I worked for the Cato Institute and the National Center for Policy
Analysis, a conservative think tank based in Dallas. I wrote regularly for the
Wall Street Journal editorial page, National Review, and other
conservative publications. For 12 years I wrote a syndicated column that ran in
the Washington Times, Investor’s Business Daily, the New
York Sun, and other conservative newspapers.

I supported George W. Bush in 2000, and many close friends served in
high-level administration positions. I was especially close to the Council of
Economic Advisers and often wrote columns based on input and suggestions from
its chairmen, all of whom were friends of mine. Once I even briefed Vice
President Dick Cheney on the economy.

But as the Bush 43 administration progressed, I developed an increasingly
uneasy feeling about its direction. Its tax policy was incoherent, and it had an
extremely lackadaisical attitude toward spending. In November 2003, I had an
intellectual crisis.

All during the summer of that year, an expansion of Medicare to pay for
prescription drugs for seniors was under discussion. I thought this was a
dreadful idea since Medicare was already broke, but I understood that it was
very popular politically. I talked myself into believing that Karl Rove was so
smart that he had concocted an extremely clever plan—Bush would endorse the new
benefit but do nothing to bring competing House and Senate versions of the
legislation together. That way he could get credit for supporting a popular new
spending program, but it would never actually be enacted.

I was shocked beyond belief when it turned out that Bush really wanted a
massive, budget-busting new entitlement program after all, apparently to buy
himself re-election in 2004. He put all the pressure the White House could
muster on House Republicans to vote for Medicare Part D and even suppressed
internal administration estimates that it would cost far more than Congress
believed. After holding the vote open for an unprecedented three hours, with
Bush himself awakened in the middle of the night to apply pressure, the House
Republican leadership was successful in ramming the legislation through after a
few cowardly conservatives switched their votes.

It’s worth remembering that Paul Ryan, among other so-called fiscal hawks,
voted for this irresponsible, unfunded expansion of government.

Suddenly, I felt adrift, politically and intellectually. I now saw many
things I had long had misgivings about, such as all the Republican pork-barrel
projects that Bush refused to veto, in sharper relief. They were no longer
exceptions to conservative governance but its core during the Bush 43 years.
I began writing columns that were highly critical of Bush’s policies and
those of Republicans in Congress—all based on solid conservative principles. In
other words, I was criticizing them from the inside, from the right.

In 2004 I got to know the journalist Ron Suskind, whose book The Price of
Loyalty I had praised in a column. He and I shared an interest in trying to
figure out what made Bush tick. Neither of us ever figured it out.

A couple of weeks before the 2004 election, Suskind wrote a long
article for the New York Times Magazine that quoted some of my
comments to him that were highly critical of Bush and the drift of Republican
policy. The article is best remembered for his quote from an anonymous White
House official dismissing critics like me for being “the reality-based
community.”

The day after the article appeared, my boss called to chew me out, saying
that Karl Rove had called him personally to complain about it. I promised to be
more circumspect in the future.

Interestingly, a couple of days after the Suskind article appeared, I
happened to be at a reception for some right-wing organization that many of my
think tank friends were also attending. I assumed I would get a lot of grief for
my comments in the Suskind article and was surprised when there was none at
all.

Finally, I started asking people about it. Not one person had read it or
cared in the slightest what the New York Times had to say about
anything. They all viewed it as having as much credibility as Pravda
and a similar political philosophy as well. Some were indignant that I would
even suspect them of reading a left-wing rag such as the New York
Times.

I was flabbergasted. Until that moment I had not realized how closed the
right-wing mind had become. Even assuming that my friends’ view of the
Times’ philosophy was correct, which it most certainly was not, why would
they not want to know what their enemy was thinking? This was my first exposure
to what has been called “epistemic
closure” among conservatives—living in their own bubble where nonsensical
ideas circulate with no contradiction.

My growing alienation from the right created problems for me and my employer.
I was read the riot act and told to lay off Bush because my criticism was
threatening contributions from right-wing millionaires in Dallas, many of whom
were close personal friends of his. I decided to stick to writing columns on
topics where I didn’t have to take issue with Republican policies and to channel
my concerns into a book.

I naïvely thought that a conservative critique of Bush when he was unable to
run for reelection would be welcomed on the right since it would do no electoral
harm. I also thought that once past the election, conservatives would turn on
Bush to ensure that the 2008 Republican nomination would go to someone who would
not make his mistakes.

As I wrote the book, however, my utter disdain for Bush grew, as I recalled
forgotten screw-ups and researched topics that hadn’t crossed my radar screen. I
grew to totally despise the man for his stupidity, cockiness, arrogance,
ignorance, and general cluelessness. I also lost any respect for conservatives
who continued to glorify Bush as the second coming of Ronald Reagan and as a man
they would gladly follow to the gates of hell. This was either gross, willful
ignorance or total insanity, I thought.

My book, Impostor: How George W. Bush Bankrupted America and Betrayed the
Reagan Legacy, was published in February 2006. I had been summarily fired
by the think tank I worked for back in October 2005. Although the book was then
only in manuscript, my boss falsely claimed that it was already costing the
organization contributions. He never detailed, nor has anyone, any factual or
analytical error in the book.

Among the interesting reactions to my book is that I was banned from Fox
News. My publicist was told that orders had come down from on high that it was
to receive no publicity whatsoever, not even attacks. Whoever gave that order
was smart; attacks from the right would have sold books. Being ignored was
poison for sales.

I later learned that the order to ignore me extended throughout Rupert
Murdoch’s empire. For example, I stopped being quoted in the Wall Street
Journal.* Awhile back, a reporter who left the Journal confirmed
to me that the paper had given her orders not to mention me. Other dissident
conservatives, such as David Frum and Andrew Sullivan, have told me that they
are banned from Fox as well. More epistemic closure.

Seeing the demographic trends toward an increasingly nonwhite electorate,
which were obvious in easily available census projections, I decided to write a
book about how Republicans could deal with it. I concluded that the
anti-immigrant attitude among the Republican base was too severe for the party
to reach out meaningfully to the fast-growing Latino community. Recall that
Bush’s proposal for immigration reform was soundly rejected by his own
party.

If Republicans had no hope of attracting Latino votes, what other nonwhite
group could they attract? Maybe the time had come for them to make a major play
for the black vote. I thought that blacks and Latinos were natural political and
economic competitors, and I saw in poll data that blacks were receptive to a
hardline position on illegal immigration. I also knew that many blacks felt
ignored by Democrats, who simply took their votes for granted—as Republicans did
for 60 years after the Civil War.

If Republicans could only increase their share of the black vote from 10
percent, which it had been since Goldwater, to the 30 percent level that Dwight
Eisenhower enjoyed, it would have major electoral ramifications.

The best way to get Republicans to read a book about reaching out for the
black vote, I thought, was to detail the Democratic Party’s long history of
maltreatment of blacks. After all, the party was based in the South for 100
years after the war, and all of the ugly racism we associate with that region
was enacted and enforced by Democratic politicians. I was surprised that such a
book didn’t already exist.

I thought knowing the Democratic Party’s pre-1964 history of racism, which is
indisputable, would give Republicans a story to tell when they went before black
groups to solicit votes. I thought it would also make Republicans more
sympathetic to the problems of the black community, many of which are historical
in their origins. Analyses by economists and sociologists show that historical
racism still holds back African-Americans even though it has diminished
radically since the 1960s.

So I wrote Wrong on Race: The Democratic Party’s Buried Past.
Unfortunately, it was published the day Barack Obama won the Iowa caucuses. But
I still held out hope that Hillary Clinton, who was pandering to the white
working class in unsubtle racial terms, would capture the Democratic nomination.
The anger among blacks at having the nomination effectively stolen from Obama
would make them highly receptive to GOP outreach, I believed. I even met with
John McCain’s staff about this.

As we know, McCain took a sharp right turn after Obama won the Democratic
nomination. The Arizona senator abandoned any pretense of being a moderate or
“maverick” and spent the campaign pandering to the Republican Party’s lowest
common denominator. His decision to put the grossly unqualified Sarah Palin on
his ticket was nothing short of irresponsible. Perhaps more importantly, it
didn’t work, and Obama won easily.

After the failure of my race book, I turned my attention again to economics.
I had written an
op-ed for the New York Times in 2007 suggesting that it was time to
retire “supply-side economics” as a school of thought. Having been deeply
involved in its development, I felt that everything important the supply-siders
had to say had now been fully incorporated into mainstream economics. All that
was left was nutty stuff like the Laffer Curve that alienated academic
economists who were otherwise sympathetic to the supply-side view. I said the
supply-siders should declare victory and go home.

I decided to write a book elaborating my argument. I thought I had a nice
thesis to put forward. All successful schools of economic thought follow a
progression of being outsiders and revolutionaries, achieving success when
economic circumstances cannot be explained by orthodox theory, acceptance for
the dissidents, followed by inevitable failure when new circumstances arise that
don’t fit the model, leading to the rise of a fresh school of thought. It was
basically a Thomas Kuhnian view of economic theory.

I thought I had two perfect examples that fit my model of the rise and fall
of economic ideas: Keynesian economics and supply-side economics. I thought at
first I knew enough about the former to say what I wanted to say, but eventually
I found the research I had previously done to be wanting. It was based too much
on what academics thought and not enough on how Keynesian ideas penetrated the
policymaking community.

I hit upon the idea of ignoring the academic journals and looking instead at
what economists like John Maynard Keynes, Irving Fisher, and others said in
newspaper interviews and articles for popular publications. Recently
computerized databases made such investigation far easier than it previously had
been.

After careful research along these lines, I came to the annoying conclusion
that Keynes had been 100 percent right in the 1930s. Previously, I had thought
the opposite. But facts were facts and there was no denying my conclusion. It
didn’t affect the argument in my book, which was only about the rise and fall of
ideas. The fact that Keynesian ideas were correct as well as popular simply made
my thesis stronger.

I finished the book just as the economy was collapsing in the fall of 2008.
This created another intellectual crisis for me. Having just finished a careful
study of the 1930s, it was immediately obvious to me that the economy was
suffering from the very same problem, a lack of aggregate demand. We needed
Keynesian policies again, which completely ruined my nice rise-and-fall thesis.
Keynesian ideas had arisen from the intellectual grave.

The book needed to be rethought and rewritten from scratch in light of new
developments. Unfortunately, my publisher insisted on publishing it on schedule.
I tried to repair the damage as best I could, but in the end the book was a
mishmash of competing ideas with no clear narrative. It sold poorly.

On the plus side, I think I had a very clear understanding of the economic
crisis from day one. I even wrote another
op-ed for the New York Times in December 2008 advocating a
Keynesian cure that holds up very well in light of history. Annoyingly, however,
I found myself joined at the hip to Paul Krugman, whose analysis was identical
to my own. I had previously viewed Krugman as an intellectual enemy and attacked
him rather colorfully in an old column that he still remembers.

For the record, no one has been more correct in his analysis and
prescriptions for the economy’s problems than Paul Krugman. The blind hatred for
him on the right simply pushed me further away from my old allies and
comrades.

The final line for me to cross in complete alienation from the right was my
recognition that Obama is not a leftist. In fact, he’s barely a liberal—and only
because the political spectrum has moved so far to the right that moderate
Republicans from the past are now considered hardcore leftists by right-wing
standards today. Viewed in historical context, I see Obama as actually being on
the center-right.

At this point, I lost every last friend I had on the right. Some have been
known to pass me in silence at the supermarket or even to cross the street when
they see me coming. People who were as close to me as brothers and sisters have
disowned me.

I think they believe they are just disciplining me, hoping I will admit error
and ask for forgiveness. They clearly don’t know me very well. My attitude is
that anyone who puts politics above friendship is not someone I care to have in
my life.

So here we are, post-election 2012. All the stupidity and closed-mindedness
that right-wingers have displayed over the last 10 years has come back to haunt
them. It is now widely understood that the nation may be center-left after all,
not center-right as conservatives thought. Overwhelming losses by Republicans to
all the nation’s nonwhite voters have created a Democratic coalition that will
govern the nation for the foreseeable future.

Tellingly, a key reason for Obama’s victory, according to exit polls, is none
other than George W. Bush, whom 60 percent of voters primarily blame for the
nation’s economic woes—an extraordinary fact when he has been out of office for
four years. Even though they didn’t read my Impostor book, voters still
absorbed its message.

Although the approach I suggested in my race book was ill-timed, the
underlying theory is more true than ever. If Republicans can’t bring blacks into
their coalition, they are finished at the presidential level, given the rapid
rise of the Latino population. Perhaps after 2016, they may be willing to put my
strategy into operation.

The economy continues to conform to textbook Keynesianism.
We still need more aggregate demand, and the Republican idea that tax cuts for
the rich will save us becomes more ridiculous by the day. People will long
remember Mitt Romney’s politically tone-deaf attack on half the nation’s
population for being losers, leeches, and moochers because he accurately
articulated the right-wing worldview.

At least a few conservatives now recognize that Republicans suffer for
epistemic closure. They were genuinely shocked at Romney’s loss because they
ignored every poll not produced by a right-wing pollster such as Rasmussen or
approved by right-wing pundits such as the perpetually wrong Dick Morris. Living
in the Fox News cocoon, most Republicans had no clue that they were losing or
that their ideas were both stupid and politically unpopular.

I am disinclined to think that Republicans are yet ready for a serious
questioning of their philosophy or strategy. They comfort themselves with the
fact that they held the House (due to gerrymandering) and think that just
improving their get-out-the-vote system and throwing a few bones to the Latino
community will fix their problem. There appears to be no recognition that their
defects are far, far deeper and will require serious introspection and
rethinking of how Republicans can win going forward. The alternative is
permanent loss of the White House and probably the Senate as well, which means
they can only temporarily block Democratic initiatives and never advance their
own.

I’ve paid a heavy price, both personal and financial, for my evolution from
comfortably within the Republican Party and conservative movement to a less than
comfortable position somewhere on the center-left. Honest to God, I am not a
liberal or a Democrat. But these days, they are the only people who will listen
to me. When Republicans and conservatives once again start asking my opinion, I
will know they are on the road to recovery.

Bruce Bartlett is the author of The Benefit and the Burden: Tax
Reform—Why We Need It and What It Will Take.

*Gerald Seib, Washington bureau chief of the Wall Street Journal,
has contacted me to say that it is flatly untrue that Journal reporters
are prohibited from quoting me. I take him at his word and do not doubt his
sincerity.